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Customer Edge (CE): a device that is deployed at the edge of a customer network and has interfaces directly connected to the service provider (SP) network. A CE device can be a router, a switch, or a host. Generally, CE devices do not detect VPNs and do not need to support MPLS.

Provider Edge (PE): a device that is deployed at the edge of an SP network and directly connected to one or more CE devices. On an MPLS network, PE devices process all VPN services and must have high performance.

Provider (P): a backbone device that is deployed on an SP network and is not directly connected to CE devices. P devices only need to provide basic MPLS forwarding capabilities and do not maintain VPN information.

PE and P devices are managed by SPs. CE devices are managed by customers unless SPs are authorized to manage them.

One PE device can connect to one or more CE devices. One CE device can connect to one or more PE devices of the same or different SPs.

Purpose

A traditional VPN sets up full-mesh tunnels or permanent virtual circuits (PVCs) between all sites to forward VPN data. This method makes networks difficult to maintain and expand. When a new site is added to an established VPN, a network administrator must modify the configuration of all edge nodes connected to this site.

A BGP/MPLS IP VPN uses a peer model that enables SPs and customers to exchange routing information. The SPs are responsible for forwarding data of customers, without requiring customer participation. A BGP/MPLS IP VPN is more scalable and more easier to manage than a traditional VPN. When a new site is added, a network administrator only needs to modify the configuration of the edge nodes serving the new site.